The decision followed talks between Britain's International Development Minister Clare Short and Tanzania's President Benjamin Mkapa in the administrative capital of Dodoma.

"We want to establish a long-term partnership with Tanzania to support these efforts and see real improvements for the people of Tanzania," Ms Short was reported as saying.

A Department of International Development spokeswoman told BBC News Online that Tanzania would receive a mix of budgetary support, which had been suspended, and new aid.

The money would be dispersed over a six-year period.

Ms Short's visit to Tanzania comes amid controversy over Dodoma's decision to buy a £28m British military air traffic control system.

On the radar

The statement said Mr Mkapa and Ms Short had discussed the radar.

"The discussions were frank and the two agreed to work together to support Tanzania's efforts to find the best way forward," a statement on Wednesday said without giving further details.

Critics of the radar purchase claim Tanzania, one of the world's poorest countries, could have bought a more appropriate civilian system for less than half of what it will pay British aerospace giant BAE Systems.

Ms Short has reportedly opposed the decision to grant BAE Systems an export license.

The statement said Britain and Tanzania had "learnt lessons" from the deal and that his government would improve the management of public funds.